math321 said:
dont understand this compound interest thing
can some1 guide me through this
Find the effective rate of interest.
11.75% compounded monthly
==Calculation== (From Wikipedia)
The effective interest rate is calculated as if compounded annually. The effective rate is calculated
in the following way, where r is the effective annual rate, i the nominal rate, and n the number of
compounding periods per year (for example, 12 for monthly compounding):
\(\displaystyle r \ = \ (1 + i/n)^{n} - 1\)
\(\displaystyle i \ = \ the \ nominal \ rate \ as \ a \ decimal \ number \ = \ 0.1175\)
\(\displaystyle n \ = \ the \ number \ of \ compounding \ periods \ per \ year = 12\)
\(\displaystyle r \ = \ the \ effective \ rate \ of \ interest.\)
\(\displaystyle r \ = \ (1 + \frac{0.1175}{12})^{12} - 1\)
Then work on this calculation...
